property taxes and rates etc, trends in Brisbane property

Shots fired in body corp dispute

newsletter-gun-storyWe’ve all had days when our neighbours get under our skin, but police are investigating an argument and weapons incident in a Gold Coast penthouse apartment last Thursday that’s apparently all about body corp fees. And this issue is one that all apartment and townhouse owners need to know about.

Imagine for a moment you own a 1 bedroom apartment and your body corp fees rise by 70%, effective immediately. Why? The penthouse owner believes the sharing of building costs isn’t fair, and has been handed a fee reduction. Queensland’s Commercial and Consumer Tribunal has dozens of cases before it (2 were heard in Brisbane last week alone) where apartment owners are asking for a cut in their fees, at the expense of their neighbours. And in almost every case they’re successful.

The Body Corporate and Community Management Act calls for all owners to pay equal contributions to the running costs of a building/community (through “lot entitlements”) unless it’s “just and equitable” that they don’t. In recent hearings the Tribunal’s saying the property’s size, height and number of bedrooms aren’t relevant to the fees you should pay. Trouble’s brewing because most buildings’ lot entitlements were set prior to the Act kicking off in 1997 and there was no previous requirement for equal numbers. Entitlements were usually set by value of the apartment, so 1 bedders on a low floor often pay a lot less than 3 bedroom penthouse at the top.

The 2004 appeal to our Supreme Court known as Fischer v Centrepoint Apartments was the important test. Fischer, a Spring Hill penthouse owner, trounced his neighbours and got his fees reduced, this precedent opening the door for any aggrieved owner to simply submit a $200 request to the Tribunal to lower their fees.

If you buy your apartment with fees disclosed up front, shouldn’t you be bound by them? How can an owner buy with certainty if their neighbours can ask for a rule change at any time? Given the law changed in 1997 should earlier buildings be ‘protected’ (they’re not now). On the other hand, why should some owners effectively subsidise their fellow owners’ building expenses?

Neither NSW or Victoria regulate the setting of lot entitlements and, if appealed, the value of the apartment is relevant to the Tribunal decision. Are Queenslanders determined to be “more equal”? And how many more apartment owners will see their fees leap up before the government fixes this mess? We don’t have the answer but this is a prickly issue that won’t go away. Even before last week’s shooting the Attorney General had issued a discussion paper on the problem and submissions close this Friday.

And for those buildings where the fees have already been adjusted by the Tribunal? Must be fun sharing the lift…